Trollip saga - as the EFF appears to gain more and more support and media attention, they attempted to oust Athol Trollip this last week in PE...but it ended in a stalemate.

Hermanus - things started to get ugly in Hermanus this week, as a few thousand persons took the land expropriation into their own hands and attempted to seize land...

As the week began, all eyes were on the more long term effect of Moody's giving SA another chance on their credit rating.

This was seen as expected, but still very positive. Surely this would just drive Rand-positive sentiment through the roof this week, on the back of all the other positive changes?

Well, the markets don't quite work how one would expect them to.

Also, there was some voices of reason - highlighting the massive, potentially economy-crippling ideas, such as Land Expropriation. This is more than a mere challenge for Ramaphosa, if he seeks to not only avoid #JunkStatus again, but grow the country out of a very poor position.

And as expected by Dynamic Outcomes with our forecast on Friday, the effect of Moody's decision was short term only, as we saw the Rand weakening significantly in the latter half of the week (see below - click to enlarge)...The big turning point for the week, turned out to be the Interest Rate cut by SARB, by 0.25% as the market faltered horribly following that.

While it was the turning point, bear in mind that it was the trigger...not the cause of the weakening itself.

Anyway, with that in mind, it was interesting to see this decision.

Especially after just last week, the USA increased their interest rates.

This is seen as Rand negative from a carry trade point of view. It means that the interest differential has reduced by 0.5% which is not a big change, but it does reduce the attractiveness of SA money market returns, nonetheless...

Also, Eskom got hit by a double whammy, as we saw a downgrade from S&P and Moody's, sending them deeper into junk...things are not looking so pretty even with a new management team at the helm.

And frankly, who can blame the ratings agencies for doing this, citing no clear plan been put in place to turn things around..

And in no time, the short week was over, and we were into the long Easter weekend...!

The Week Ahead (2-6 April 2018)

And here we are - a quarter way through the year already.

The week starts with good local news and bad international news.

Good news of course being a 3-1 thrashing of Australia by the Proteas - their first home series win against the Aussies since 1970!

And the bad news - trade war fears have increased as China announces imposing tariffs on USA goods in retaliation to Trump's tariffs on steel and aluminium.

Where this will end is anyone's guess, but clearly Trump is intent on reversing a crippling trade deficit and protecting the US economy from cheap imports - and theft of intellectual property from US companies. Watch this space....

Where to for the Rand in another short week?

We expect some range trading in the early part of the week before we break out of this and start trending in earnest.

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